Aladdin Al Deesi, EVP – Head of Mashreq Gold, Emirati & Distribution at Mashreq, discusses how technology rests at the heart of the modern financial landscape.
From the days of basic valuables storage and rudimentary lending to today’s sophisticated landscape – banking has evolved in leaps and bounds. And at the core of this evolution is innovation, with technology as the key driver of progress; whether in enhancing security, supporting the development of trust or enabling the most advanced of banking solutions, technology has been at the heart of this sophisticated financial landscape.
The Dynamic History of Banking
Mesopotamian temples acted as the first examples of bank safe-keeping, with early financial services being basic loans extended – with interest – and recorded on clay tablets. Greek and Roman civilizations developed this nascent banking system with the addition of deposits and money-changing, and money-lenders present in marketplaces. Medieval societies further refined the landscape, shaping the beginning of banking ethics, and the early 1600s saw the establishment of the first central banks in Sweden and England, stabilising currency and funding governments. Industrialisation in the 18- and 1900s accelerated development of the banking industry, with the globalisation of the 1900s and the ongoing digital revolution resulting in the sophisticated financial landscape of today.
From ATMs to AI-backed services
Although an automated teller machine (ATM) seems the most basic of self-service banking options these days, the introduction of such machines in the 1960s could be considered the start of the redefinition of the banking industry. The launch of online and mobile banking in the 1990s continued the revolution – particularly for branch banking – by rendering many paper-based, labour-intensive processes redundant. And artificial intelligence (AI) and machine learning in recent years has catapulted the industry into a futuristic phase that includes vastly enhanced customer experience, greater levels of cybersecurity than ever before and extreme hyper-personalization.
With new changes, come new challenges
With the development of sophisticated technology comes a unique set of challenges the banking industry must address to remain on the rapid upward trajectory. Banks themselves, in adopting new technology, must ensure their employees and partners are adequately educated about and trained on the use of such technology. The rapid pace of change dictates that banks must continuously adapt, and invest in new technologies and systems, creating a need for ongoing training, upskilling and development.
Alongside increased reliance on digital platforms comes a need for superior security measures to counter cyberthreats and protect sensitive financial data. It also calls for the highest levels of transparency to engender trust. As banks increasingly rely on technology, customers may be wary of sharing their personal and financial information. Therefore, building and maintaining trust is essential, and banks must prioritise transparency in their operations and data handling practices.
The evolving regulatory landscape
As technology has transformed banking operations, regulatory frameworks have had to adapt. Governments and financial regulatory bodies have recognised the need to ensure consumer protection, data privacy, and the stability of the financial system, introducing policies and regulations to ensure compliance and transparency.
These regulations have driven a need for banks to invest in compliance measures and adjust their operational processes. On the other hand, they have helped foster innovation, as financial institutions seek to leverage technology to meet regulatory requirements more efficiently. For example, RegTech (regulatory technology) solutions have emerged, utilising AI and machine learning to automate compliance processes and reduce costs.
The Future is Now
The financial landscape of the 2020s involves digital-only banks, hyper-personalization, open banking, embedded finance, and ESG- and sustainability-linked finance, all supported by the very latest cutting-edge, state-of-the-art technology. Digital-only banks, featuring the most sophisticated of platforms, enable customers to take care of all their financial needs without ever setting foot in a branch, while hyper-personalization – enabled by technology such as generative AI and data analytics – results in the most intuitive, empathetic, tailor-made customer interactions. Open banking and embedded finance, also enabled by technology such as AI, offer access to seamless payment solutions without the need to input sensitive financial information each time a payment is required. And ESG- and sustainability-linked finance, also supported by technology, enables customers to choose financial options that align with their personal priorities.
What Next?
The evolution of banking has been, and continues to be, profoundly influenced by technology. As the landscape continues to evolve, financial institutions must stay ahead of the technological curve and continue to adapt to changing consumer preferences. Ongoing research and development will yield new innovations that will further transform how banks operate and serve their customers. In parallel, developments in cybersecurity must keep pace.
As we move forward, the role of technology in banking will only become more pronounced. The further integration of advanced technologies such as AI, data analytics, and blockchain, will shape a future where banking is not only more accessible, but also more aligned with the needs and values of consumers.
The evolution of banking is testament to the industry’s resilience and adaptability, and its future promises to be as dynamic as its past.
Image Credit: Mashreq
